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Activeworlds Signs Definitive Merger Agreement with Hi-G-Tek, Ltd.NEW YORK --(Business Wire)-- Dec. 15, 2004 -- Activeworlds Corp. (OTCBB: AWLD) (the "Company") has entered into a definitive Agreement and Plan of Merger with Hi-G-Tek, Ltd., an Israeli based ("Hi-G-Tek") manufacturer of highly sophisticated active radio frequency identification ("Active RFID") devices for use in security applications. The Company previously publicly disclosed that it had entered into a letter of intent to acquire Hi-G-Tek subject to completion of due diligence. Pursuant to the terms of the Agreement, as consideration for the acquisition, the Company will issue 27,886,972 shares (on a fully diluted basis) of Activeworlds' restricted common stock to the current stockholders of Hi-G-Tek. After the closing, the current stockholders of Hi-G-Tek will hold approximately 68% of the total outstanding common stock of the Company. As a result of Activeworlds' extensive due diligence and further negotiations with Hi-G-Tek management, the merger consideration was reduced from 43,183,880 shares issuable by Activeworlds (approximately 77% of the total outstanding common stock). In addition, the finders' fees payable by Activeworlds upon closing were modified in limited respects with Baytree Capital, llc, an affiliate of Activeworlds, receiving 1,431,531 shares of restricted common stock and warrants to purchase an additional 1,431,531 shares at $1.00 per share (an increase from the previously disclosed 1,119,403 shares and warrants) and another finder receiving 409,009 shares of restricted Activeworlds' common stock (a decrease from 559,702 shares). As part of the Merger Agreement, Hi-G-Tek agreed to issue to Activeworlds an exclusive North American license to all of Hi-G-Tek's intellectual property, including its active two-way radio frequency identification and monitoring technology which is aimed at the homeland security market. Additionally, Activeworlds is required to have $3,450,000 in cash, the bulk of which has been committed by a group of accredited and highly select investors pursuant to a private offering. According to Mr. Sean Deson, President of Activeworlds, "Although the negotiations concerning the definitive Merger Agreement took longer than anticipated, the result is good for all. We are very excited about the potential of Hi-G-Tek's Active RFID technology. I look forward to continuing my role as a Director to help build Hi-G-Tek into a world class company." Mr. Micha Auerbach, president of Hi-G-Tek, commented, "Our entire management team is very enthusiastic about working with Sean and Baytree to roll-out our Active RFID technology and products. We selected Activeworlds not only because of our confidence that it will raise the necessary capital but because we believe that this union significantly broadens our presence in the North American markets. We expect in the near term extensive business development activities and new strategic partnerships. In addition we believe that Sean Deson and Baytree will continue to provide us with solid business advice and assist us in providing stockholder value." The merger is expected to close on or before February 28, 2005 following expiration of the 71-day required waiting period required under Israeli law. Forward-looking statements The statements made in this press release relating to closing of the merger, the broadening of Hi-G-Tek's presence in North America and the expected business development activities and strategic partnerships are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Additionally words such as "seek," "intend," "believe," "plan," "estimate," "will," "may," "expect," "anticipate" and other similar expressions are forward-looking statements within the meaning of the Act. Some or all of the results anticipated by these forward-looking statements may not occur. Factors that could cause or contribute to such differences include, but are not limited to, regulatory issues arising in Israel, a material adverse change in Hi-G-Tek's business or affecting its intellectual property, business or contractual issues that impact the planned business development and its future success in marketing its products. |
